Inflation fears

07/01/2011

As food and energy prices soar, the price of a litre of petrol is set to break the £1.30 barrier - news that’s enough to make you want to get on your bike and ride.

Oil prices in London have already reached the $95 a barrel mark, with the average price for a litre of petrol rising to 127.21 pence, sparking economists to predict that inflation will jump to 4% this year.

Market analyst David Buik insists it is only a matter of time before we see higher petrol prices at the pump.

He said: 'I wouldn't be surprised to see petrol rise to 130p per litre in the next couple of weeks.

'It will take time for the Organisation of the Petroleum Countries and oil producers to take action to calm prices and if we see any further bad weather it will just be used by the forecourt retailers as an excuse to put up prices.'

The VAT increase has already added an average of 2p per litre to the price of fuel, according to the AA, which claims that a typical 50-litre tank costs £8.59 more to fill than a year ago and warns that 'lower income drivers have reached breaking point'.

Still, at least there’s the royal wedding to look forward to this year.